It can be easy to think that if you haven’t bought your own house by about age 45, you’ve missed your chance. And ING data reveals that about half of Europeans who in 2017 don’t yet own their own home believe they’ll never be able to afford to do so. In our survey, 17% of 18-24s,half of the 25-34s, and 62% of the 35-44 year olds report they own or jointly own their home, either with or without a mortgage.
A much smaller share join the ranks of home owners after that age: home ownership only rises two percentage points among the 45-54s, to 64%, with just a few more buying after age 55. Yet six of every 10 non-owners across all ages quizzed say they would like to buy – with many agreeing home ownership is a smart money decision.
Have over-45s missed the boat?
As this article suggests, even once you’re over 35 you can have problems getting a mortgage, especially if you want 30 years to pay it off. Lenders typically use the expected number of years until retirement to work out how much help they will offer.
And the clock is ticking: house prices are increasing in many countries, while you’re still potentially saving for a deposit. Even young people can be caught out by soaring property prices. Meanwhile changes to the economy or your job can reduce your earnings.
And what if you buy at the wrong time, pay too much, and fall into negative equity a few years later? House prices do fall, as well as rise. Availability bias, when we make decisions based on what springs to mind first, such as recent events, can mean that’s an easy fact to forget.
The stakes get higher … and higher
That said, ING’s 2017 research reveals 61% in Europe feel housing in their area is already expensive – and one in five (21%) already say paying rent is difficult, or that it’s hard to keep up with their mortgage repayments. Worse still, 59% of Europeans report that they expect house prices to go on increasing.
Back in 2015, Europeans agreed it is increasingly difficult for first-time buyers of any age to get on the housing ladder. This article suggests that even if they do, it can take the rest of their life to pay their property off. All this can work to convince you the “right time” to buy a home was in the past, and will never return.
But let’s think again
However, the age of first-time buyers has been rising in many countries, such as Australia. So how do they do it?
One in five (21%) already say paying rent is difficult, or that it’s hard to keep up with their mortgage repayments.
Good news: some providers do offer mortgages beyond the state retirement age. In the UK in 2016, one or two indicated they might consider a 10-year-loan until age 95, for applicants as old as 85. Typically, you must have a good strategy for paying it off once you retire, perhaps by downsizing into a smaller house or using earnings from investments.
In some circumstances, you might get a mortgage even if you’ve already retired. So if you’re still dreaming of your own home, you may yet beat inertia and catch up with more settled peers with a few simple steps.
Find out the minimum and maximum loan amounts that finance providers or banks are offering as well as the potential prices of suitable houses. Don’t forget to check current interest rates and fees, and work out how they contribute to your overall costs – many people fail to understand the effect of interest rates and percentage-based fees that are calculated and recalculated over time.
Don’t be tempted to rely on simple rules of thumb or base your research on just a few pieces of information. Take the time to work out all the figures in detail: you may come to a different decision.
Budgeting for your goal
With the facts at hand, redo your budget. Many handy budgeting and mortgage calculators are available online. If you alter the inputs, such as deposit size, you may find an equation which works for your situation. If you can arrange a shorter term and pay less interest over time, you’ll reach the goal sooner. This article suggests ways to pay a mortgage off more quickly.
Break the ultimate savings goal down into bite-size amounts to put aside every pay day. Write everything down with a pen and paper and place it where you can regularly see the calculations. Research shows this can boost your memory, as well as help a goal feel more achievable.
Make it real
Set longer-term savings milestones, month by month and year by year, and monitor your progress, perhaps with a mobile phone app – seeing your progress will help motivate you. And remember: ING’s research tracks a small but steady trickle of older people becoming home owners, even into the 65+ age bracket.
This article is related to the ING International Survey: